Here is the question: A 3 year 6% coupon , semiannual pay note has a yield to maturity of 5.5%, if an investor holds this note to maturity and earns a 4.5% return on reinvested coupon income, his realized yield on the note is cloese to a 5.46% b 5.57% c5.68% d 5.79% any tips? or solution
A Because the coupons are reinvested at a lower rate than the yield to maturity, and yield to maturity assumes reinvestment of coupons at 5.5%, the yield to maturity must be lower than 5.5%. A is the only one that is lower than 5.5%, therefore no calculation is required.